Fair trade farmers poorer

Farmers producing fair trade coffee in northern Nicaragua are more likely to be living below the absolute poverty line than conventional producers, a new study from the University of Hohenheim has found. "Over a period of 10 years, our analysis shows that organic and organic-fair trade farmers have become poorer relative to conventional producers," the study reveals.

Compared to standard coffee prices, organic and organic fair trade producers received eight and 11 per cent more respectively, but the study reports that certified farmers also have higher production costs and that these are not adequately covered by higher premiums. "Higher farm-gate prices do not lead necessarily to higher incomes," explains Tina Beuchelt, one of the authors. "Certification fees, low yields and productivity levels, production costs, land size, as well as labour availability play important roles. Certification schemes do not address and cannot solve these problems," Beuchelt adds.

Governments, NGO's and donors have promoted certified coffee as a way to increase the incomes of smallholder farmers in developing countries, who produce the majority of the worlds production. But Beuchelt argues that certification schemes can only be a part of a viable development strategy to help smallscale farmers in Nicaragua.

The study recommends that policies should address low coffee yields by developing improved and locally adapted varieties, investing in rural infrastructure, improving extension systems and the way smallholder cooperatives are managed in order to better link farmers with high-value markets and ensure transparency. "Coffee yields, profitability and efficiency need to be increased, as prices for certified coffee cannot compensate for low productivity, land or labour constraints," Beuchelt concludes.